Question

open market operations refer to which action by a central bank?
a. adjusting interest rates on stock markets
b. buying and selling treasury securities
c. regulating the amount of money banks hold in reserve
d. changing the price banks pay to borrow money

Explanation:

Open market operations are a core monetary policy tool where central banks trade government securities to influence the money supply and interest rates. Option A is incorrect as central banks don't adjust stock market interest rates this way. Option C refers to reserve requirements, a separate policy tool. Option D describes the discount rate or federal funds rate adjustments, not open market operations. Only option B matches the definition.

Answer:

B. Buying and selling treasury securities